Written by He Qinglian on August 26, 2011
(translated by krizcpec)
After revolutions broke out in MENA, a striking phenomenon appeared. Britain, U.S. and Switzerland, one after another, announced a freeze on the huge wealth that Zine El Abidine Ben Ali, Hosni Mubarak, and Muammar Gaddafi have accumulated and deposited in Western Democracies.
These democracies unanimously pledged that once the new governments in Tunisia, Egypt and Libya have completed relevant legal procedures, the assets of the above mentioned dictators will be returned to the countries concerned.
Of those countries, Libya has been caught in armed conflict for months. With victory in sight, its opposition force appeal to the West for financial assistance because it has run out of money. And the UN has just passed a resolution to defrost about 1.5 billion of Gaddafi’s assets to meet urgent humanitarian needs. The first batch of Gaddafi's assets to be thawed is deposited in South Africa and Italy.
The Dictator Assets Law of Switzerland
It would not be surprising that the U.S. freezes dictators' assets. However, Switzerland, the world's most secure safe was cracked only last year. If you have been paying attention to the way dictators of totalitarian regimes hide their gold, you should be able to recall that in 2009, the UBS had had to return illicit assets to family of dictator Mobutu Sese Seko, and not to Zaire, from which those assets had been embezzled.
Before Mobutu Sese Seko was toppled, he was considered one of the world's richest persons. His personal assets were about five to eight billion U.S. dollars, which amounted to 40% of annual international aid to Zaire.
An independent survey conducted by a Swiss banker showed that Mobutu Sese Seko left only $ 3.4 million of his estate to his descendants; the whereabouts of the multibillion U.S. dollars assets amassed during his thirty-two years reign remains a mystery to this day.
But Mobutu Sese Seko may be the last dictator who could let his family enjoyed the wealth he plundered. In 2010, under the pressure from the international community led by the U.S., the Swiss Parliament had had to pass a new legislation, the Dictator Assets Law, regarding the issue of returning illicit funds dictators have deposited in UBS.
This law gave the [Swiss] Federal Council the power to freeze the disputed assets. Once such assets have been frozen, the Federal Council would have up to ten years to take action to confiscate these assets. That law provides in principle that once these assets are returned, they must be used to improve the quality of life for the population at large, strengthen the judicial system, and fight against crimes.
The law came into effect on February 1, 2011, about the time revolutions in Tunisia, Egypt, and Libya broke out. According to this law, the UBS has announced in succession a freeze on the assets of dictators like Zine El Abidine Ben Ali, Hosni Mubarak, Muammar Gaddafi and their families.
The first person this law has it effect on was Ben Ali. Five days after he fled his country, Switzerland decided, with immediate effect, to freeze all accounts and assets associated to Ben Ali. The Federal Council that comprised seven members also agreed to freeze all property that belonged to Laurent Gbagbo of Côte d'Ivoire.
The Politically Exposed Persons Database of UBS
It is necessary to go back to the introduction process of this Dictator Assets Law of Switzerland. It should be said that until 2009, it was safe for the world’s dictators and corrupt to choose Switzerland as the land to hide their gold. Only that this kind of safety was not the same as that before 1987. From that year onward, Switzerland, under various pressures, canceled anonymous accounts. As a result, whether or not the assets deposited thereafter were safe depended entirely on the political security of dictators.After World War II, because of its business relationship with Nazi, UBS was referred to as the bank of the Nazi; its banking secrecy system came under fire from Jewish communities and organizations around the world. UBS was forced to modify its traditional secrecy system, canceled anonymous accounts in 1987 and [since 1977] requested its staff to “know your customer” – which meant the identity of every new customer and his or her economic “legitimacy” has to be confirmed. The “Know your customer” procedures specify that if the new clients are “PEPs” who hold public offices in foreign countries, the bank would have to assess the legal or reputation risk they might bring. Names of the relatives of these leaders are also on the list. If the applicants want to handle issues relevant to account opening through an intermediary, they have to sign a special list, stating who are the beneficiaries.
From then on, Switzerland has a “Politically Exposed Persons Database”, which other banks can subscribe. In the case of Ben Ali, forty names of his relatives were listed and their assets were all frozen.
Because of the PEP database set up in 1987, the huge assets that autocrats like Marcos of the Philippines, Ceausescu of Romania, Mobutu of Zaire kept at UBS came to light after their regimes had been overthrown.
Such news aroused anger in the world and blame, and UBS had to continue its secrecy system reform.
In 2007, as urged by the U.S., the UNODC and the World Bank launched a new joint initiative, the Stolen Assets Recovery (StAR) Initiative: Challenges, Opportunities, and Action Plan. The initiative aimed to help developing countries to recover state assets stolen by corrupt leaders and officials, and put these to investment in development projects. On the day following the launch of this initiative, Switzerland promptly issued a statement that showed its willingness to cooperate with UNODC and the World Bank. The “product” of that cooperation was the Swiss legislation of Dictator Assets Law in 2010.
After UBS has made these adjustments, leaders of the world’s authoritarian states have lost their last safe for the ill-gotten gains they put in so much effort to obtain.
Other Western countries, unlike Switzerland, did not intentionally shield ill-gotten gains of dictators and all kinds of people; they, the United States in particular, have a tradition of freezing ill-gotten gains in the name of justice.
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The Politically Exposed Persons List
From http://www.primeassociates.com/prime/lists.asp
It is a requirement that institutions are aware of dealings with “Politically Exposed Persons”. The term Politically Exposed Persons ("PEPs") applies to those individuals who perform public functions for a government or administrative body, members of ruling royal families, as well as influential people in religious organizations that have a sphere of influence over political, military or judicial matters. Also of regulatory significance are the family and close associates of Politically Exposed Persons. All information is derived from publicly available sources and is screened for quality.
Since the financial transactions of individuals identified as PEPs and their associates may be of interest to those organizations acting as their agent, it is incumbent upon financial institutions to know their customers and identify PEPs with which they do business. Metavante’s Politically Exposed Persons data subscription will enable organizations to do just that.
Related info: Global PEP list by WorldCompliance
